Property data curator ATTOM released its fourth quarter 2023 U.S. Home Affordability Report showing that median-priced single-family homes and condos remained less affordable in the fourth quarter compared with historical averages in 99 percent of counties around the nation with enough data to analyze.
The latest trend continues a pattern dating back to 2021 of homeownership requiring historically large portions of wages around the country.
Data also shows that major expenses on median-priced homes consume 33.7 percent of the average national wage in the fourth quarter – a level considered unaffordable by common lending standards.
“The good news is that home affordability has stopped getting tougher around the U.S., at least for the moment,” ATTOM CEO Rob Barber said in a release. “The bad news is that owning a home remains more of a financial stretch than it’s been for many years. The annual fall slowdown in the housing market clearly has helped stem the tide working against potential purchasers. Whether that’s just a temporary thing tied to seasonal market patterns is something we won’t know until next year, especially given recent signs that interest rates are coming down. But for now, there is some break into the growing financial stress for house hunters.”
Both historical and current affordability have stayed virtually the same from the third quarter to the fourth quarter of 2023 after trending consistently against homebuyers for almost three years. That has happened as major ownership expenses and wages both remained virtually unchanged in the fourth quarter, ATTOM added.
Fourth quarter trends come at a time of mixed patterns among home prices and home-mortgage interest rates. While average 30-year fixed mortgage rates around the U.S. have grown this quarter from 7.1 to 7.4 percent, the nationwide median home value has slipped almost 3 percent. ATTOM said those two factors have helped to keep homeownership expenses steady from the third to the fourth quarter, which has helped to keep those costs from becoming even more unaffordable for average workers.
Affordability had worsened almost every prior quarter since early 2021 as wage increases were outpaced by rising interest rates and prices that kept going up amid a decade-long market boom.
Another round of price declines during the annual winter market contraction combined with interest rate declines that have emerged very recently may help turn the affordability picture back around in favor of buyers, ATTOM said.